Summary
| Category | Data |
|---|---|
| Court | Supreme Court of India |
| Case Number | C.A. No.-014407-014407 – 2025 |
| Diary Number | 23491/2023 |
| Judge Name | HON’BLE MR. JUSTICE R. MAHADEVAN |
| Bench | HON’BLE MRS. JUSTICE B.V. NAGARATHNA; HON’BLE MR. JUSTICE R. MAHADEVAN |
| Precedent Value | Binding on all courts |
| Overrules / Affirms | Affirms Hamda Ammal v. Avadiappa Pathar and related precedents |
| Type of Law | Civil Procedure; Property Law |
| Questions of Law |
|
| Ratio Decidendi | The Court held that Order XXXVIII Rule 5 CPC requires the property to belong to the defendant on the suit’s institution date; a sale deed executed and possession delivered before filing cannot be attached under Rule 5. While Rule 8 read with Order XXI Rule 58 CPC allows adjudication of claims to attached property, it cannot subsume a substantive Section 53 TPA inquiry. Fraudulent-transfer challenges must lie under Section 53 TPA, and mere suspicion or delay cannot substitute proof of intent to defeat creditors. |
| Judgments Relied Upon |
|
| Logic / Jurisprudence / Authorities Relied Upon by the Court | The statutory scheme of attachment before judgment (Order XXXVIII Rules 5–10) and amended execution-claim procedure (Order XXI Rule 58) was analysed alongside Section 53 TPA. The Court distinguished procedural safeguards from substantive fraudulent-transfer remedies, reaffirmed that pre-suit transfers cannot be frozen, and placed the burden on creditors to prove intent to defeat or delay. |
| Facts as Summarised by the Court | The original applicant acquired the property by registered sale deed dated 28.06.2004. The creditor filed suit on 18.12.2004 and obtained attachment before judgment on 13.02.2005. The trial and High Courts treated the sale as fraudulent under Section 53 TPA in a Rule 8 claim petition. The Supreme Court examined whether the pre-suit transfer was immune from attachment. |
Practical Impact
| Category | Impact |
|---|---|
| Binding On | All courts in India |
| Persuasive For | High Courts and lower courts in analogous civil-procedure and property disputes |
| Follows | Hamda Ammal v. Avadiappa Pathar (1991 1 SCC 715); Vannarakkal Kallalathil Sreedharan v. Chandramaath Balakrishnan (1990 3 SCC 291); Rajender Singh v. Ramdhar Singh (2001 6 SCC 213) |
What’s New / What Lawyers Should Note
- Attachment before judgment cannot reach property already transferred by a registered sale deed prior to suit.
- Fraudulent-transfer claims under Section 53 TPA must be pursued in a substantive suit and cannot be fully resolved in Rule 8/Order XXI Rule 58 proceedings.
- Order XXXVIII Rule 5 CPC is confined to preventing disposal of property belonging to the defendant when the suit is filed; pre-suit transfers fall outside its scope.
- Mere suspicion, inadequacy of consideration, or delay in filing a claim do not constitute proof of intent to defeat creditors.
- This judgment is binding and should be cited to challenge attachments on pre-suit transfers.
Summary of Legal Reasoning
- Order XXXVIII Rules 5–10 CPC provide a protective remedy only if the property belongs to the defendant on the suit’s institution date; pre-suit transfers cannot be attached.
- Rule 8 read with Order XXI Rule 58 CPC incorporates execution-claim adjudication but does not convert Rule 5 proceedings into substantive Section 53 TPA trials.
- Amendment of Order XXI Rule 58 (1976) enlarged claim-adjudication scope, yet fraudulent-transfer issues require proof under Section 53 TPA.
- Section 53 TPA voidable-transfer claims must be made by creditors demonstrating intent to defeat or delay; transferees in good faith for consideration are protected.
- Precedents (Hamda Ammal, Vannarakkal, Rajender Singh) confirm that completed agreements or deeds prior to attachment bind the attaching creditor and thus bar attachment.
- The Court insisted on concrete evidence of fraudulent intent; suspicion and delay cannot substitute proof.
- The Supreme Court set aside the courts below, holding the sale deed valid and attachment inapplicable.
Arguments by the Parties
Petitioner (Appellant’s) Submissions
- Attachment under Order XXXVIII Rule 5 CPC is not maintainable against property transferred before the suit.
- Courts below exceeded jurisdiction by treating Rule 8 proceedings as Section 53 TPA trials.
- No evidence of fraud; burden lay on creditor.
- Order XXXVIII Rule 10 CPC protects rights of bona fide purchasers.
- Delay in filing claim petition cannot defeat a pre-existing sale.
Respondent No. 1 (Creditor’s) Submissions
- Post-1976 amendments allow fraudulent-transfer challenges in Rule 8/Order XXI Rule 58 proceedings.
- Creditors must be protected against collusive transfers without separate Section 53 suits.
- Precedents (Abdul Shukoor Saheb) recognize fraud inquiries in attachment claims.
- The sale deed was collusive to defeat creditors; courts below rightly held it voidable.
Factual Background
The predecessor of the appellants purchased the property by a registered sale deed on 28 June 2004. On 18 December 2004, the creditor sued for recovery and obtained attachment before judgment on 13 February 2005. The purchaser claimed release of attachment in April 2007, arguing that the sale was completed prior to suit. Both the trial Court and the High Court deemed the transfer fraudulent under Section 53 TPA and rejected the claim, leading to this appeal.
Statutory Analysis
- Order XXXVIII Rules 5–10 CPC: Provide for attachment before judgment, conditional on the property belonging to the defendant when suit is filed (Rule 5), adjudication of third-party claims as in execution (Rule 8), and protection of strangers’ pre-existing rights (Rule 10).
- Order XXI Rule 58 CPC: Post-1976 amendment mandates that execution-claim proceedings decide all questions of right, title, and interest; its scheme applies equally to Rule 8 claims.
- Section 53 TPA: Renders transfers made with intent to defeat or delay creditors voidable at the creditor’s option, while protecting transferees in good faith and for consideration; substantive suits are required to set aside fraudulent transfers.
Alert Indicators
- ✔ Precedent Followed (reaffirms established law on pre-suit transfers and attachment).